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AIRCEL

THIRTEENTH ANNUAL REPORT

2004-05

AIRCEL CELLULAR LIMITED

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AIRCEL CELLULAR LIMITED

THIRTEENTH ANNUAL REPORT

INFORMATION ON BOARD OF DIRECTORS & OTHER PARTICULARS

Board of Directors Mr KVP Baskaran, Whole-time Director

Mr v Srinivasan, Director
Mr sriram chandrasekar, Director
Mr Rohit Chandra, Director

Audit Committee - Members Mr v Srinivasan, Chairman

Mr KVP Baskaran
Mr sriram Chandrasekar
Mr Rohit Chandra

Company Secretary Mr R vijayakrishnan

Auditors M/s Deloitte Haskins & Sells
Chartered Accountants
No 5 Nandanam Extension
1st street, Nandanam
Chennai 600035

Registered Office Aircel cellular Limited

5th Floor, Spencer Plaza
769, Anna salai
Chennai 600 002
Tel: (044) 2849 0849
Fax: (044) 2849 6769

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Aircel Cellular Limited

AIRCEL
AIRCEL CELLULAR LIMITED
Registered Office: 5th Floor, 'Spencer Plaza',
769, Anna Salai, Chennai 600 002

NOTICE

Notice is hereby given that the THIRTEENTH Annual General Meeting of the Members ol
AIRCEL CELLULAR LIMITED will be held on Saturday, the 25th June 2005 at 11.00 AM
at the Registered Office of the Company at 5th Floor, 'Spencer Plaza', 769, Anna Salai,
Chennai 600 002, to transact the following business'

Ordinary Business

1. To consider and adopt the Audited Balance Sheet as at 31st March 2005, Profit ami i.o>>
Account for the year ended on that date and the Reports of the Board of Directors and
Auditors thereon.

2. To appoint a Director in place of Mr V Srinivasan, who retires by rotation and being eligible.
offers himself for re-appointment.

3. To appoint Messrs. Deloitte, Haskins & Sells, Chartered Accountants, Chennai as the
Auditors of the Company, who shall hold office from the conclusion of this Annual deneral
Meeting until the conclusion of the next Annual General Meeting and to fix their
remuneration.

Special Business

4. To consider and if thought fit, to pass, with or without moditication(s). the following
resolution as an Ordinary Resolution:

RESOLVED that Mr Sriram Chandrasekar, be and is hereby appointed as a Directoi of the-

Company subject to retirement by rotation under Article 95 of the Articles of Association of
the Company.

5. To consider and if thought fit, to pass, with or without modification(s). the following
resolution as an Ordinary Resolution:

RESOLVED that Mr Rohit Chandra, be and is hereby appointed as a Director >\\ the
Company subject to retirement by rotation under Article 95 of the Articles of Association of
the Company.

CERTIFIED TRUE COPY

Umlt8<J
AGM NOTICE - 2005

q VI rAV4KRISHNAr>
t'orrspany ^ e c - ' e t s r - '

Aircel Cellular Limited

Regd. Office : 5th Floor, Spencer Plaza, 769, Anna Salai, Chennai - 600 002 Ph: 91-44-28490849www.reportjunction.com
Fax: 91-44-28496769
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Aircel Cellular Limited

AIRCEL
6. To consider, and if thought fit, to pass with or with out modification(s). the following
resolution(s) as a Special Resolution:

RESOLVED that pursuant to Section 31 of the Companies Act, 1956 and other applicable
provisions, if any, Article 94(4) of the Articles of Association of the Company be deleted

By Order of the Board of Directors

.tu
Chennai R Vijayakrishnan
31st May 2005 Company Secretary

NOTES:

1. An Explanatory Statement pursuant to Section 173(2) of the Companies Act. 195c> in lespect
of the special business is attached.

2. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote
instead of himself and the proxy need not be a member of the Company. The
instrument appointing proxy should, however, be deposited at the Registered Office of
the Company not less than forty-eight hours before the commencement of the meeting.

3. Shareholders are requested to bring their copy of Annual Report to the Meeting

4. Members / Proxies should fill the Attendance Slip for attending the meeting.

5. Members who hold shares in dematerialised form are requested to write their Client If) and
DP ID numbers and those who hold shares in physical form are requested to write their Folio
Number in the attendance slip for attending the Meeting.

6. All documents referred to in the accompanying Notice are open for inspection at the
Registered Office of the Company during office hours on all working days, except Saturdays
and holidays, between 11.00 AM. and 1.00 PM upto the date of the Annual General Meeting.

7. Corporate Members are requested to send a duly certified copy ot the Board Resolution
authorising their representative to attend and vote at the Annual General Meeting.

By Order of the Board of Directors

Chennai R Vijayakrishnan
31st May 2005 Company Secretary

AGM NOTICE - 2005

Aircel Cellular Limited

Regd. Office : 5th Floor, Spencer Plaza, 769, Anna Salai, Chennai - 600 002 Ph: 91-44-28490849 Fax: 91-44-28496769
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Aircel Cellular Limited

AIRCEL
Explanatory statement pursuant to Section 173(2) of the Companies Act. 1956

Item No.4

Mr Sriram Chandrasekar was appointed as an Additional Director of the Company with effect
from 19th January 2005, pursuant to Article 106 of the Articles of Association of the Company
In terms of Section 260 of the Companies Act, 1956, Mr Sriram Chandrasekar will hold office as
Additional Director up to the date of the ensuing Annual General Meeting. The Company has
received a notice in writing from a member along with a deposit of five hundred rupees
proposing the candidature of Mr Sriram Chandrasekar for the office of Director of the Company
under the provisions of Section 257 of the Companies Act, 1956.

Mr Sriram Chandrasekar, aged 38, is the Chief Operating Officer (COO) and a Director on the
Board of Dishnet Wireless Limited. Mr Sriram Chandrasekar holds a Masters Degree in
Commerce and Masters in Professional Accountancy (MPA) from Georgia State University,
USA. He had worked with leading management consultancies worldwide including Deloitte
Haskins and Arthur Andersen. Prior to this appointment, Mr Sriram had also held office as Chief
Finance Officer of Dishnet Wireless Limited and Aircel Limited. Mr Sriram Chandrasekar is in
charge of Telecom Services Group in Dishnet Wireless Limited.

Keeping in view his vast expertise and knowledge, it will be in the interest of your Company thai
Mr Sriram Chandrasekar is appointed as a Director of the Company. Your Directors, therefore,
recommend the resolution for approval.

Interest of Directors
Save and except Mr Sriram Chandrasekar, none of the other Directors of the Company is. in any-
way, concerned or interested in this resolution.

Item No.5

Mr Rohit Chandra was appointed as an Additional Director of the Company with effect from
19th January 2005, pursuant to Article 106 of the Articles of Association of the Company. In
terms of Section 260 of the Companies Act, 1956, Mr Rohit Chandra will hold office as
Additional Director up to the date of the ensuing Annual General Meeting. The Company lias
received a notice in writing from a member along with a deposit of five hundred rupees
proposing the candidature of Mr Rohit Chandra for the office of Director of the Company under
the provisions of Section 257 of the Companies Act, 1956.

Mr Rohit Chandra, aged 40, is a Director on the Board of Dishnet Wireless Limited Mr Rohit
Chandra is a Communications Engineer from the Aligarh Muslim University and has held senior
positions in several global organizations including Philips. Mr Rohit Chandra was previously
with Ericsson India on a five-year stint, where he was the Executive Vice President responsible
for Sales. Mr Rohit Chandra heads the GSM telecom operations in Dishnet Wireless I imited

Keeping in view his vast expertise and knowledge, it will be in the interest of your Company thai
Mr Rohit Chandra is appointed as a Director of the Company. Your Directors, therefore
recommend the resolution for approval.
7?( ' ; iC^
AGM NOTICE - 2005 ' ' J ( i

Aircei Cellular Limited

Regd. Office : 5th Floor, Spencer Plaza, 769, Anna Salai, Chennai - 600 002 Ph: 91-44-28490849 Fax: 91-44-28496769
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Aircel Cellular Limited

AIRCEL
Interest of Directors
Save and except Mr Rohit Chandra, none of the other Directors of the Company is, in any way.
concerned or interested in this resolution.

Item No.6

Article 94(4) of the Articles of Association of the Company deals with the filling up of the office
of Director consequent to the death, resignation or by any other cause. The Article provides that a
Director shall be immediately appointed to fill in any vacancy due to an> of the afore-mentioned
reasons and such Director shall be nominated by the same shareholder who had nominated the
principal original Director.

The Article is sought to be deleted now. The provisions of Companies Act, 195(> would be
applicable in cases of any vacancy of office of Director consequent to death, resignation or any
other cause, consequent to the deletion of this Article.

Interest of Directors
None of the Directors of the Company may be deemed to be concerned or interested in tin above
resolution.

Documents for inspection

The Memorandum and Articles of Association of the Company would be available for inspection
of the Members during the course of the Meeting.

By Order of the Board of Directors

Chennai R Vijayakrishnan
31st May 2005 Company Secretary

AGM NOTICE - 2005

Aircel Cellular Limited

Regd. Office: 5th Floor, Spencer Plaza, 769, Anna Salai, Chennai - 600 002 Ph: 91-44-28490849 Fax. 91-44-28496769
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Aircel Cellular Limited

DIRECTORS' REPORT

To the Members of AIRCEL CELLULAR LIMITED

Your Directors are pleased to present the Thirteenth Annual Report of your Company
for the year ended 31st March 2005.

Financial Results

The financial results of the Company for the year ended 31st March 2005 and a
comparison of the same with the performance during the previous year are given
below:

/Rs._/n Millions)
Particulars Year ended Year ended j
31st March 2005 31st March 2004 j
Operating Revenues 1,928.64
Operating expenses 1,195.62 891.69
EBIDTA 733.02 636.00
Finance Charges 126.08 209.29
Non-cash expenditure 380.22 ~ '.260.21
Net income from operations 226.72 166.50
Income from other operations 14.35 '_ 1^36.26
PBT 241.07 201,761
Provision for Current Tax 19.00 """13.80
Provision for Deferred Tax (102.99) ' (2.33)
Profit After Tax 325.06 191.29
Accumulated Profit/(Loss) (273.25) (464.53)
brought forward
Profit carried to Balance Sheet 51.81 "(273.25)
Cash Profit 705.28 451.50

Your Directors are pleased to inform you that your Company has recorded Net Profit
After Tax (PAT) for the fifth year in succession. Profit After Tax for the year was
Rs.325.06 million as compared to Rs.191.29 million the previous financial year,

Your Directors are pleased to report that your Company had wiped out all the
accumulated losses during the year.

Operating Revenues during the year grew by 26% compared to the previous year.
There was a significant increase in the net profit for the year, mainly due to
increased revenues that was attributable to substantial growth of subscribers. The
increase in profit was also on account of significant reduction in operating
expenditure mainly on account of various cost control measures put in place by the
Company.

Depreciation for the year has increased due to the increased capital expenditure on
account of network expansions carried out during the year.

Dividend

Your Directors do not recommend any dividend on the equity shares for the ye<u

Directors Report - 2005 TRUE COPY

For Aircel Cellular Limited

R. VU'AYAKRISHNAN
Company Secretary
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Aircel Cellular Limited

OPERATIONS & NETWORK

During the year under review, your Company undertook various network expansion
activities in order to augment the existing capacity. Your Company installed a new
Mobile Switching Centres (MSC). The total switch capacity of your Company, in terms
of Erlangs is 20,000 as compared to 5,000 Erlangs during last year.

During the year 149 new base stations were installed. Your Company had also
installed a new Short Messaging Service (SMS) server that can serve upto 700
messages per second.

Your Directors are pleased to report that Company's ambitious expansion program
are in the final stage of completion and the same is expected to be completed by
June 2005. On completion of expansion, the IN and Switch capacity would increase
apart from offering better quality of service. The Company would shortly launch its
General Pocket Radio Service (GPRS) to its subscribers.

Your Company currently has two Mobile Switching Centres (MSC), Five Base Station
Controllers (BSC) and 350 Base Transceiver Stations (BTS) in the Metro.

The year witnessed phenomenal growth in the subscriber base of your Company
Your Directors are pleased to report that the Company has regained its number one
position in the Circle during September 2004 and had since been successful in
retaining the same. There had been a phenomenal growth in the subscriber base
during the year. Your Company closed the year with 541,340 subscribers as
compared to 313,006 subscribers last year, registering an impressive 73% growth.
The Company increased its market share to 35% of GSM market, up from the 32%
last year. The Company's share in total mobility market was 27%.

On the usage front, the average Minutes of Usage of Aircel subscribers were 354
minutes per month. The Average Revenue Per User dropped to Rs.267 per month
from Rs.344 per month the previous year. The decline is mainly due to factors like
increase in pre-paid ratio in overall subscriber base, rationalisation of National and
International long distance tariffs across both post-paid and pre-paid segments etc.

Marketing

During the year, the focus of your Company was on increasing its post-paid market
share apart from consolidating its pre-paid leadership position. Your Directors are
pleased to report that various marketing initiatives of the Company during the year
were well received in the market as is reflected in the growth of subscribers.

Dealer Network

The number of Post-paid dealers as at 31st March 2005 was 19 and the Pre-paid
distributors were 12. The number of registered Pre-paid retailers as at the close of
the financial year was 6,500. To increase the Company's reach in the Metro, your
Company has been taking various measures to identify and appoint dealers who
could market the Company's products aggressively in a highly competitive
environment.

Directors Report - 2005

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Aircel Cellular Limited

Accolades

Your Directors are pleased to report that in a survey conducted by the International
Data Corporation (IDC), your Company had been rated as No.l among all mobile
operators in India in terms of overall satisfaction. In the rating, your Company had
scored 97 points on a 100-point user satisfaction scale, clearly crossing the Telecom
Regulatory Authority of India (TRAI) benchmark of 95 per cent.

In another survey viz. "Mobile Users Satisfaction Survey 2004" conducted by Voice &
Data, a leading publication in the communications sector, your Company had been
rated as the No.l operator in terms of overall satisfaction. The survey placed "Aircel"
at the top of the table comprising of 15 operators (including 9 GSM operators) across
the nation with 97% satisfaction levels against the industry average of 85.80%.

Directors

Mr Ashok Srinivasan, Director resigned from the Board during the year. Your
Directors place on record their appreciation and gratitude for the unstinted and
invaluable guidance and contribution by Mr Ashok Srinivasan during his tenure as
Director of the Company.

Mr V Srinivasan, Director of the Company, retires by rotation at the forthcoming

Annual General Meeting of the Company and being eligible, offers himself for re-
appointment.

During the year, Mr Sriram Chandrasekar and Mr Rohit Chandra were inducted as
Additional Directors on the Board. Both Mr Sriram Chandrasekar and Mr Rohit
Chandra vacate office at the ensuing Annual General Meeting of the Company The
Company has received notices under Section 257 of the Companies Act, 1956 from
shareholders of the Company proposing appointments of Mr Sriram Chandrasekar
and Mr Rohit Chandra as Directors of the Company at the ensuing Annual General
Meeting of the Company.

Disclosure as per the Companies (Disclosure of Particulars in the Report of

Board of Directors) Rules, 1988

In terms of Section 217(l)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, your
Directors furnish the required details below:

(a) Disclosure of Particulars pertaining to Conservation of Energy is not applicable to

the Company;
(b) Research and Development (R&D): The Company has not incurred any
expenditure on Research & Development.
(c) Technology Absorption: The Company has not imported any technology during
the year.
(d) Foreign Exchange Earnings and Outgo: During the period under review, your
Company earned foreign exchange amounting to Rs.94.36 millions. The Foreign
Exchange outgo during the period was Rs.247.31 millions.

Directors Report - 2005

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Aircel Cellular Limited

Fixed Deposits

Your Company has not accepted any fixed deposits and, as such, no amount of
principal or interest was outstanding as of the Balance Sheet date.

Particulars of Employees

The particulars of employees who were in receipt of salary beyond the limits
prescribed by Section 217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, is given separately in Annexure to this
Report.

Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors hereby
confirm that they have, in the preparation of the annual accounts:
(i) followed the applicable accounting standards along with proper explanations to
material departures;
(ii) selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Company at the end of the financial
year and of the profit or loss of the Company for that period;
(iii) taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of this Act for safeguarding the assets
of the Company and for preventing and detecting fraud and other irregularities;
and
(iv) prepared the annual accounts on a going concern basis.

Auditors

Messrs AF Ferguson & Co., Chartered Accountants, Chennai, who were appointed as
the Auditors of the Company at the last Annual General Meeting of the Company
resigned during the year citing their other commitments for non-continuance in
office.

Your Company had appointed Messrs Deloitte Haskins & Sells, Chartered
Accountants, Chennai as the Statutory Auditors of the Company at the Extra
Ordinary General Meeting of the Company held on 29th January 2005. Messrs
Deloitte Haskins & Sells continue in office till the ensuing Annual General Meeting
and have confirmed their eligibility to be appointed as Auditors of the Company

The Audit Committee of the Board had at their Meeting held on 31st May 2005,
recommended the appointment of M/s Deloitte Haskins & Sells as the Statutory
Auditors of the Company. Accordingly, the Board of Directors recommend the
appointment of M/s Deloitte Haskins & Sells, Chartered Accountants, as Auditors of
the Company for approval of Members and to fix their remuneration.

Directors Report - 2005

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